How To Open A Bank Account

There are currently five main banks in South Africa, each offering a variety of options when it comes to opening an account:

Different banks in South Africa

To open a bank account, you’ll need:

  • A valid South African ID
  • Proof of residence (usually a utility bill no older than three months) *If you’re not sure what documents you can use as proof of residence, just call the bank and ask. They can give you a few options to choose from.
  • At least three month’s payslips. *If you don’t have a job and can’t produce payslips, there are other banks that can offer you an alternative. These banks will ask for a South African ID, proof of residence and a deposit of R50.
  • A minimum deposit of R50.

If you’re under 18, you’ll need the consent of a parent or legal guardian. You’ll also need:

  • A valid ID or birth certificate
  • Proof of residence
  • A completed application form signed by a parent or legal guardian
  • A valid ID belonging to a parent or legal guardian
  • A minimum deposit of R50.

Types Of Bank Accounts

Opening an account is the easy part – deciding what account is right for you can be somewhat trickier. Opening a bank account is the start of your journey to managing your finances effectively.

Because there are so many different types of accounts – all with their own pros and cons – it is advised that you speak to a financial consultant within the branch where you apply for your account. Ask them about the options available to you. They can’t advise you on which one is best but they can give you enough information for you to decide that for yourself.

Remember, when you’re deciding on the right account for you, you’ll want to focus on the unique services, charges and benefits of each one.

Choosing Your Account 

Here’s a breakdown of the different types of accounts you can choose from:

 

Cheque or Current Account

– you need to make a minimum qualifying salary in order to be approved for this sort of account. You can make deposits, debits, withdrawals and transfers from this type of account, and it usually comes with low interest rates. It’s worth noting that this type of account usually comes with a monthly fee. You’ll be given a debit card to make payments from this account.

Savings Account

 – a savings account is usually one that is used to help you stash away money for a rainy day, but some banks will let you use it as a transactional account. You’ll usually need to give a bank notice when you make a very large withdrawal.

Money Market Account

 – if you’re looking for a larger investment account, the Money Market Account might be an appealing option. You’ll probably need to put down a larger deposit and maintain a higher balance, but it will also reward you with higher interest rates. Keep in mind that this is still a short-term investment account and the benefits that each bank has to offer will vary, so make sure that you speak to a consultant in one of your local branches before signing up.

Savings Vs Cheque Accounts

 

TYPES OF SAVINGS ACCOUNTS

 

1. Short-Term Savings Account

  • Fixed Deposit Accounts – you need to invest a minimum of R1 000 into this account and then pick your investment period. Depending on the account, you can choose anything between 33 days and 5 years. The reward for investing for a specific period of time is the fixed interest rate you’ll get, as long as you don’t take your money out early.

 

  • Tax-Free Call Deposit – did you know that you can invest up to R30 000 every year (and up to R500 000 over your lifetime) in an account that will earn you interest and you don’t have to pay tax on that interest?! It all starts with just R250 – and remember that the more money you have in your account, the more interest you will earn.

 

 

 

2. Long-Term Savings Account

  • Fixed Deposit Accounts – you need to invest a minimum of R1 000 into this account and then pick your investment period. Depending on the account, you can choose anything between 33 days and 5 years. The reward for investing for a specific period of time is the fixed interest rate you’ll get, as long as you don’t take your money out early.

 

  • Tax-Free Call Deposit – did you know that you can invest up to R30 000 every year (and up to R500 000 over your lifetime) in an account that will earn you interest and you don’t have to pay tax on that interest?! It all starts with just R250 – and remember that the more money you have in your account, the more interest you will earn.

 

There are many different types of savings accounts on the market and it all depends on where you open your account you will need:

  • Your ID book or passport
  • Your proof of residence

The Cheque Account

A cheque account works in a similar way to a savings account because it allows you to deposit your money into the account and then access this money with a card. This means you don’t have to carry cash around with you, and it can actually help you to build your credit score – and that’s where it differs from a savings account. You won’t get interest on the money you store in your cheque account, but having money going into and out of the account will help you to start building your credit score.

To get approved for a cheque account, you’ll need:

  • To earn at least R3 000 (depending on the bank)
  • To deposit at least R50 to open the account
  • A valid South African ID
  • Proof of residence

DEBIT CARDS VS CREDIT CARDS

 

Debit Card

A debit card is a card that allows you to access money that you’ve deposited into your bank account. You can use the card to pay for goods and services anywhere that accepts card payments. Some banks may charge you a fee for using your debit card, but this will depend on the type of account you have.

Credit Card

A credit card, on the other hand, is a card that allows you to access a pre-approved loan (sometimes it comes in the form of an overdraft). This isn’t money you’ve earned and you will need to make repayments on the amount you’ve spent, along with interest. The interest rate will depend on the type of credit card you have.

Is It Easy to Get a Debit or Credit Card?

A debit card is much easier than getting a credit card because you usually simply have to be approved for a bank account and you’ll automatically get a debit card that is linked to your account. A credit card, on the other hand, is much trickier.

You need to apply for a credit card with a credit card provider (a bank or another financial institution) and the ease with which you will be approved for one will usually depend on things like your credit score.

Just because you have a low credit score, doesn’t mean you will be ruled out from getting a credit card – it might, however, mean that you’ll pay a lot more interest on the money you borrow.

Top Tip: Making Debit and Credit Cards Work for You

A credit card can come in handy when you’re short on cash, but it can also become a drain on your finances. It can be really appealing to spend more money than you can afford to repay on a credit card, and missing monthly payments on your credit card could have a really negative impact on your credit rating.

A debit card is always the safer option of the two because it means you’ll only ever spend the money you already have. This makes it easier to live “within your means”, which basically means that you’ll never spend more than you earn.

Credit cards are not all bad, however. Did you know that you can use a credit card to improve your credit rating? You just need to make sure you get the right type of card so that you don’t end up trapping yourself in a cycle of unnecessary debt.

How do you do this? Some banks offer credit cards with an interest-free period on purchases up to 50 or 60 days. All you need to do is make sure that you pay off your outstanding balance before this period is up.

That’s not all. You need to make sure you understand what the interest rate is, how much you’re being charged, and how much you’ll end up owing the credit card company when you’re done paying off the card.

If you want to learn more about credit scoring, click here.

Get In Touch

082 345 2101

learn@lifegap.org

gauteng, south africa

LifeGap teaches you what you need to know to be prepared for the “Real World”. The book is divided into three sections; Personal, Financial and Governmental.